What is Dropshipping?

Drop shipping simply refers to a retail fulfillment model where you do not stock the products you are selling. Instead of physically stocking the products you want to sell, you just display the items online (on your website mostly). Once a buyer places an order, you forward the order to the vendor who then acts as a third party and fulfills the orders on your behalf.

From the above explanation, it is clear that the dropshipping business model usually depends of the participation of three parties namely:

Supplier: The first in the chain is the dropshipping supplier who fulfills the orders placed by a customer. For instance, if you are selling shirts by H&M and a customer places an order for a shirt, you will send the order details to H&M and it, being the supplier, will fulfill the order.

Retailer: The retailer is the person/organization that acts as an intermediary who takes orders from the customer and forwards them to the supplier who then fulfills them. This order taking process can be through a website or a social media account.

Customer: The customer is the person who places the order through the website or social media account.

Now that you know the parties involved in the dropshipping business model, let us examine a tad bit more on how the dropshipping model works.